MAR-2-05 CO:R:C:V 735181 RC

Mr. David Gransbury
The Ulu Factory, Inc.
298 Warehouse Avenue
Anchorage, Alaska 99501

RE: Country of origin marking for ulu knives; substantial transformation; conspicuous location; 19 CFR 134.47; 19 CFR 134.46.

Dear Mr. Gransbury:

This is in response to your letter of April 8, 1993, forwarded to us by the National Import Specialist (NIS) in which you requested tariff classification and country of origin marking rulings for a "ulu" knife made of both domestic and foreign parts. The classification issue was addressed in a separate reply. We regret the delay in responding. FACTS:

You intend to import blades from Taiwan or possibly China. The handles will be manufactured in the U.S. and affixed to the imported blades domestically. The imported blades may require domestic polishing. You prefer to indicate the country of origin on the individual blades with removable stickers. The bulk containers will also indicate the country of origin of the blades. You believe that the imported blades undergo a substantial transformation in the U.S. The blades may also be "embellished" in the U.S. and require a final sharpening in the U.S. You submitted a sample finished ulu knife, a retail box, and a blade as imported. One side of the finished ulu knife is visible through a transparent section of the retail packaging. The blade is embellished with a depiction of a mountain. Directly below the mountain appear the words "MT. McKINLEY". The retail package indicates "the ALASKA ULU" in approximately 45 points printed across the front and back side. (A point is a unit of type measurement equal to 0.01384 inch or nearly 1/72 inch, and all type sizes are multiples of this unit.) These words do not indicate whether or not they are within the scope of a registered trademark. The words "MADE IN ALASKA" also appear on the front and back side, in approximately 9 points. Lastly, the words "ANCHORAGE, ALASKA" appear on the back side, in approximately 6 points.

ISSUE:

What is the acceptable country of origin marking under 19 U.S.C. 1304?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires that articles of foreign origin or their containers be marked in a conspicuous place legibly, indelibly, and permanently to indicate to the ultimate purchaser the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The "country of origin" for marking purposes is defined, in section 19 CFR 134.1(b), to mean the country of manufacture, production, or growth of any article of foreign origin entering the U.S. The "ultimate purchaser" is generally defined, in section 19 CFR 134.1(d), as the last person in the United States who will receive the article in the form in which it was imported.

As provided under section 19 CFR 134.43, knives and parts of knives shall be marked legibly and conspicuously by die stamping, cast-in-the-mold lettering, etching (acid or electrolytic), engraving, or by means of metal plates which bear the prescribed marking and which are securely attached to the article in a conspicuous place by welding, screws, or rivets. However, section 19 CFR 134.32(d), articles for which the marking of the containers will reasonably indicate the origin of the articles are excepted from marking requirements.

An exception from marking is provided under section 19 CFR 134.35 when a domestic processor converts or combines an article of foreign manufacture into an article having a new name, character, or use. This constitutes a substantial transformation and the domestic processor is deemed the "ultimate purchaser" of the imported article. The question of when a substantial transformation occurs for marking purposes is a question of fact to be determined on a case-by-case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026 (1982), aff'd, 1 Fed. Cir. 21, 702 F.2d 1022 (1983). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See, C.S.D. 85-25 (September 25, 1984).

As provided in section 134.14, Customs Regulations (19 CFR 134.14), when an imported article is of a kind which is usually combined with another article after importation but before delivery to an ultimate purchaser and the name indicating the country of origin of the article appears in a place on the article so that the name will be visible after such combining, the marking shall include, in addition to the name of the country of origin, words or symbols which shall clearly show that the origin indicated is that of the imported article only and not that of any other article with the imported article may be combined after importation.

Customs issued a classification ruling, HQ 954177 (July 30, 1993) with respect to the blades of the instant knives, and held that the knives were used principally for cutting, not chopping or mincing. In HQ 732057 (April 16, 1990), Customs ruled that the assembly by attaching circular knife blades to handles of a rotary cutting instrument was not a substantial transformation and Customs required the blade be marked "Blade made in Taiwan". Customs has found that a manufacturer who completes a kitchen knife in the U.S. would be the ultimate purchaser of imported knife blade stubs. See HRL 709090 (June 19, 1978). Here, we distinguish the ulu knife as a utility knife rather than a kitchen knife. As in HQ 732057 (April 16, 1990), the domestic processing does not substantially transform the imported ulu knife blades. Therefore, the ultimate purchaser is person who buys at retail, not the Ulu Factory. The foreign origin of the blades must be indicated, as provided at 19 CFR 134.43, by die- stamping, etching, engraving, or cast-in-the-mold lettering. We suggest that words such as, "blade made in Taiwan" or the like may be used to distinguish the origin of the blade from that of the knife handle. If the knives are sold only in retail packaging, you may choose to indicate the country of origin marking on the package in lieu of marking the blade itself. (See 19 CFR 134.32(d))

Section 134.46, Customs Regulations (19 CFR 134.46), provides in relevant part that when letters or words indicating the name of a country or locality other than the country of origin appear on an article, the name of the country of origin must appear "in at least comparable size" and "in close proximity" to such letters or words. emphasis added. Under section 134.47, Customs Regulations (19 CFR 134.47), when a trademark or trade name marking indicates the name of a country or locality other than the country of origin, the country of origin shall be indicated either "in close proximity or in some other conspicuous location" preceded by "Made in", "Product of", or similar words. emphasis added.

In HQ 735085 (June 4, 1993), Customs ruled that a line of frozen produce containing constituents of foreign origin and prominently named "American Mixtures" in many locations on the package was required to be marked to indicate the country of origin marking on the front of the package. There, Customs counted at least 20 references to America or a U.S. location on the packaging.

You have not advised us whether "the ALASKA ULU Knife" is a registered trademark. In any event, it appears that "Mt. McKINLEY" is a souvenir marking under 19 CFR 134.47. As a souvenir marking, the country of origin marking may appear in close proximity to the U.S. reference or in some other conspicuous location. However, in this instance, there are so many references to "Alaska" that we will require the country of origin marking to appear on both the front and back sides of the packaging. The prominence of the word "Alaska" is such that country of origin marking on this packaging is not in a conspicuous location unless it appears on the front side of the retail package.

This requirement is consistent with previous determinations in which we have found that marking which might otherwise have been in a conspicuous place is inadequate because of the appearance of words and symbols which might, in their context, suggest to the ultimate purchaser a country of origin other than the actual country of origin of the foreign article.

Based on our finding that the knife blades are not substantially transformed, Customs takes exception to the marking "Made in Alaska". You are cautioned that "Made in Alaska" may violate laws administered by the Federal Trade Commission (FTC), which has authority over certain trade practices in domestic commerce.

HOLDING:

We find that the foreign manufactured knife blades do not undergo a substantial transformation in the U.S. Therefore, the ultimate purchaser is the retail purchaser. Given the numerous references to "Alaska" on the packaging, the country of origin marking must appear on the retail packaging on the front and rear of the package. As indicated above, the marking could be in a phrasing such as: "blade made in Taiwan".

Sincerely,

John Durant, Director